Audited Financial Statements. May 31, Quigley & Miron

Transcription

1 Audited Financial Statements May 31, 2014 Quigley & Miron

2 Audited Financial Statements Table of Contents May 31, 2014 Page Number Independent Auditor s Report... 1 Audited Financial Statements Statement of Financial Position... 3 Statement of Activities... 4 Statement of Functional Expenses... 5 Statement of Cash Flows... 6 Notes to Financial Statements... 7

3 Quigley & Miron Certified Public Accountants Suite 1660 Suite 317 Suite Wilshire Boulevard 528 Arizona Avenue 1999 South Bascom Avenue Los Angeles, California Santa Monica, California Campbell, California Telephone: (213) Telephone: (310) Telephone: (408) Facsimile: (213) Facsimile: (310) Facsimile: (213) Independent Auditor s Report Board of Directors Real Medicine Inc., dba: Real Medicine Foundation Los Angeles, California We have audited the accompanying financial statements of Real Medicine Inc., dba: Real Medicine Foundation (RMF), a nonprofit organization, which comprise the statement of financial position as of May 31, 2014, and the related statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

4 Board of Directors Real Medicine Inc., dba: Real Medicine Foundation Page 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Real Medicine Inc., dba: Real Medicine Foundation as of May 31, 2014, and the changes in its net assets and cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America. Los Angeles, California March 19,

5 Statement of Financial Position May 31, 2014 Assets Current Assets Cash and cash equivalents $ 285,859 Contributions receivable 472,316 Total Current Assets 758,175 Property and Equipment, Net Note 3 28,240 Liabilities and Net Assets Total Assets $ 786,415 Current Liabilities Accounts payable and accrued expenses $ 887 Note payable Note 4 8,560 Total Liabilities 9,447 Net Assets Unrestricted 101,384 Temporarily restricted Note 5 675,584 Total Net Assets 776,968 Total Net Assets and Liabilities $ 786,415 See notes to financial statements. 3

6 Statement of Activities Year Ended May 31, 2014 Temporarily Unrestricted Restricted Total Support and Revenues Contributions and grants Note 7 $ 434,057 $ 1,528,074 $ 1,962,131 In-kind contributions Note 8 1,710 1,932,517 1,934,227 Other income 13,804 13,804 Net assets released from restrictions 3,650,939 (3,650,939) Total Support and Revenues 4,100,510 (190,348) 3,910,162 Expenses Program services 3,602,916 3,602,916 Management and general 192, ,362 Fundraising 20,529 20,529 Total Expenses 3,815,807 3,815,807 Change in Net Assets 284,703 (190,348) 94,355 Net Assets at Beginning of Year, as Previously Reported (183,319) 365, ,883 Correction of Error Note 9 500, ,730 Net Assets at Beginning of Year, as Restated (183,319) 865, ,613 See notes to financial statements. Net Assets at End of Year $ 101,384 $ 675,584 $ 776,968 4

7 Statement of Functional Expenses Year Ended May 31, 2014 Program Management Services and General Fundraising Totals Field operations $ 2,831,580 $ 6,463 $ $ 2,838,043 Outside labor 578,137 42,719 10, ,096 Professional fees 26,585 79,331 8, ,730 Assistance to local organizations 99,036 99,036 Travel and conferences 29,797 13,274 1,475 44,546 Donations 36,585 36,585 Rent 14,250 14,250 Depreciation 9,896 9,896 Telephone 51 9,022 9,073 Technology 8,002 8,002 Bank fees 4,795 4,795 Office supplies 1,145 3,155 4,300 Advertising Other expenses 1,304 1,304 Totals $ 3,602,916 $ 192,362 $ 20,529 $ 3,815,807 See notes to financial statements. 5

8 Statement of Cash Flows Year Ended May 31, 2014 Cash Flows from Operating Activities Change in net assets $ 94,355 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 9,896 Changes in operating assets and liabilities: Contributions receivable 28,414 Accounts payable and accrued expenses (4,889) Net Cash Provided by Operating Activities 127,776 Cash Flows from Investing Activities Purchases of property and equipment (109) Net Cash Used in Investing Activities (109) Cash Flows from Financing Activities Repayment of notes payable (10,272) Net Cash Used in Financing Activities (10,272) Increase (Decrease) in Cash and Cash Equivalents 117,395 Cash and Cash Equivalents at Beginning of Year 168,464 Cash and Cash Equivalents at End of Year $ 285,859 Supplementary Disclosures Interest paid $ 103 Income taxes paid $ See notes to financial statements. 6

9 Notes to Financial Statements May 31, 2014 Note 1 Organization Organization Real Medicine Inc., dba: Real Medicine Foundation (RMF) is a California nonprofit organization, formed in 2005, providing humanitarian support to people living in disaster and poverty-stricken areas, and continues to help communities long after the world's spotlight has faded. RMF believes that 'real' medicine focuses on the person as a whole by providing medical/physical, emotional, economic and social support. RMF listens, learns, and supports the long term whole health of communities most in need, and commits to projects where we will make lasting change. RMF believes in the human ability to transform - that the people in developing and disaster-stricken areas are most capable of creating solutions to their unique challenges. RMF employs, trains and educates locals, producing innovative solutions and strong communities that sustain and grow health care capacity with the help of cutting edge technology and modern best practices. RMF ignites the potential of the people it supports - turning aid into empowerment and victims into leaders. Based on today's best practice Modern Medicine, RMF utilizes a Comprehensive Integrative Health Care Model. Once survival and immediate health care needs are addressed, RMF establishes mobile and stationary health clinics employing regional medical doctors, other healthcare professionals and supporting staff, and tailoring them to local needs. Using these clinics as hubs, RMF implements additional modules of care that address the priority needs of the region being served. Programs such as Maternal Child Healthcare, Malnutrition Eradication, HIV/AIDS Care, Malaria Treatment and Prevention, mhealth, and Vocational Training and Livelihood projects are introduced to build on the infrastructure already in place. These programs, addressing some of the developing world's most important issues, are part of RMF's commitment to treating the whole person. Through its commitment to maintaining an extended local presence, and by working with local staff and resources, RMF ensures long-term sustainability, local ownership and capacity building. Since 2009, RMF has developed and implemented strategies for access to secondary and tertiary care such as support and upgrade of hospitals, and training of medical personnel, thus starting to build health care capacity and strengthen health systems on a larger scale. At its U.S. home base, RMF conducts healthcare and education outreach programs in South Los Angeles. Real Medicine Foundation's vision is to move beyond traditional humanitarian aid programs by creating long-term solutions to healthcare and poverty-related issues. By empowering people and providing them with the necessary resources, RMF paves the way for communities to become strong and self-sufficient. In just eight years, RMF has worked on four continents in 18 different countries, with currently-active projects in 13 countries, aligning with governments and international agencies (including the United Nations) to reach those most in need. In 2011, RMF was granted United Nations Special Consultative Status, as well as Private Voluntary Organization (PVO) status with USAID. RMF's primary source of revenue is contributions from individuals and foundations. 7

10 Notes to Financial Statements Continued Note 2 Summary of Significant Accounting Policies Financial Statement Presentation The financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. RMF recognizes grants and contributions, including unconditional promises to give, as revenue in the period received. Contributions and net assets are classified based on the existence or absence of donorimposed restrictions. The net assets of RMF and changes therein are classified and reported as follows: Unrestricted net assets Net assets that are not subject to donor-imposed stipulations and that may be expendable for any purpose in performing the primary objectives of RMF. Management is aware of its deficit in unrestricted net assets and is actively taking steps to rectify this situation. Temporarily restricted net assets Net assets subject to donor-imposed stipulations that may or will be met either by actions of RMF and/or the passage of time. As the restrictions are satisfied, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the accompanying financial statements as net assets released from restrictions. Permanently restricted net assets Net assets for which the donor has stipulated that the principal be maintained into perpetuity. Generally, the donors of these assets permit RMF to use all or part of the income earned on related investments for general or specific purposes. At May 31, 2014, RMF had no permanently restricted net assets. Cash and Cash Equivalents For purposes of the Statement of Cash Flows, RMF considers all highly liquid investments available for current use with a maturity of three months or less when purchased to be cash equivalents. Property and Equipment Property and equipment purchases over $1,000 are capitalized and are stated at cost. Donated equipment is recorded at its estimated fair value on the date of donation. Property and equipment are depreciated using the straight-line method over their estimated useful lives of five to seven years. Expenditures for maintenance and repairs or minor renewals are charged to expense when incurred. Concentrations of Credit Risk Financial instruments which potentially subject RMF to concentrations of credit risk consist of cash and cash equivalents and receivables. RMF maintains its domestic cash and cash equivalents at a high quality financial institution and a large broker-dealer. Accounts at the financial institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. In the normal course of business, RMF s cash and cash equivalent balances may exceed the FDIC insurance limit. The account at the large broker-dealer is uninsured but secured by the underlying assets of the money market fund in which it is invested. Contributions receivable are due from individuals and foundations wellknown to RMF with excellent payment histories. RMF s management has assessed the credit risk associated with its deposits and receivables held at May 31, 2014 and has determined that an allowance for potential losses due to credit risk is not necessary. Donated Property RMF receives donated property from third parties, which is recorded as contributions when received and as expense when used, at its estimated fair value. Some of the items received do not have readily available market values. Management believes that it would be misleading to the reader of these financial statements not to include these items; therefore, their value is estimated based on amounts paid for similar items or prices observed for similar items. 8

11 Notes to Financial Statements Continued Note 2 Summary of Significant Accounting Policies Continued Functional Expenses The costs of providing programs and other activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among programs and supporting services. Advertising Costs Advertising costs are expensed as incurred and amounted to $151 for the year ended May 31, Income Taxes No provision has been made for federal or state income taxes because RMF is exempt from such taxes under Section 501(c)(3) of the Internal Revenue Code and applicable state regulations. In addition, the Internal Revenue Service has determined that RMF is not a private foundation within the meaning of Section 509(a) of the Code. Accounting standards require an organization to evaluate its tax positions and provide for a liability for any positions that would not be considered more likely than not to be upheld under a tax authority examination. Management has evaluated its tax positions and has concluded that a provision for a tax liability is not necessary at May 31, Generally, RMF s information returns remain open for examination three (federal) and four (state) years from the date of filing. Use of Estimates The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. Note 3 Property and Equipment, Net Net property and equipment consisted of the following at May 31, 2014: Furniture and equipment $ 16,646 Software 30,925 47,571 Less accumulated depreciation (19,331) Net $ 28,240 Note 4 Note Payable RMF purchased computer software in 2012 using a line of credit from LEAF Capital Funding. The note payable was interest-free and called for monthly payments of $856 through March

12 Notes to Financial Statements Continued Note 5 Temporarily Restricted Net Assets As of May 31, 2014, temporarily restricted net assets consisted of the following: Contributions receivable $ 472,316 South Sudan program 200,000 Other projects 3,268 Total $ 675,584 Note 6 Contingencies Grants require the fulfillment of certain conditions as set forth in the instrument of the grant. Failure to fulfill the conditions could result in the return of the funds to the grantor. Although that is a possibility, RMF deems the contingency remote, since it has made its best efforts to comply in all material respects with the provisions of each grant. Note 7 Related Party Transactions RMF does not maintain office space in the United States. The organization rents a portion of the personal residence of one of RMF's staff for its file storage. RMF paid rent of approximately $1,000 per month directly to the landlord for this space starting in December Rent for the storage space during the year ended May 31, 2014 totaled $14,250. RMF's sister organization, Real Medicine Deutschland, receives contributions from European donors on behalf of the Foundation and then remits the funds to the Foundation. Contributions reported in the statement of activities for the year ended May 31, 2014 include $1,089,080 that was funded through Real Medicine Deutschland. Note 8 In-Kind Contributions In-kind contributions consist of contributed goods and supplies that meet the criteria for recognition under U.S. generally accepted accounting principles and are recognized on the statement of activities under support and revenues, and on the statement of functional expenses under field operations. For the year ended May 31, 2014, estimated fair values of in-kind contributions included in the financial statements totaled $1,934,227 for equipment, goods and supplies. 10

13 Notes to Financial Statements Continued Note 9 Correction of an Error Temporarily restricted net assets at May 31, 2013 was increased from $365,202 to $865,932 and total net assets at May 31, 2013 was increased from $181,883 to $682,613, in order to reflect contributions receivable totaling $500,730 at May 31, 2013 that had previously been unrecorded. Note 10 Support Received by Projects in Foreign Countries In addition to contributions received by RMF, the following countries received direct project contributions from donors, based on RMF fundraising efforts during the year ended May 31, 2014, as follows: Pakistan $ 106,218 India 105,971 Total $ 212,189 Note 11 Facilities in Foreign Locations RMF's projects involve use of facilities at various locations in the communities served. Furniture and equipment essential to the operation of its local programs has been purchased by RMF and donated to the project that is being served since its inception. It is RMF's intention that such items remain on location for ongoing use by the local population. Accordingly, such furniture and equipment has not been recorded on the books of RMF. Note 12 Subsequent Events Management evaluated all of RMF's activities through March 19, 2015, which is the date the financial statements were available to be issued, and concluded that no material subsequent events have occurred that would require adjustment to the financial statements or disclosure in the notes to the financial statements. 11